SPECIAL
THIRD DIVISION
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LAND BANK OF THE Petitioner, -
versus – KUMASSIE PLANTATION COMPANY
INCORPORATED, Respondent. x-----------------------------------x KUMASSIE PLANTATION COMPANY
INCORPORATED, Petitioner, - versus - LAND BANK OF THE Respondents. |
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G.R. No. 177404 G.R. No.
178097 Present: CHICO-NAZARIO, J., Chairperson, VELASCO,
JR., NACHURA, PERALTA, and BERSAMIN,* JJ. Promulgated: December
4, 2009 |
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CHICO-NAZARIO,
J.:
For resolution is a Motion[1] and
Supplement to the Motion[2] filed
in these consolidated cases by Kumassie Plantation Co., Inc. (KPCI), seeking
reconsideration of our Decision dated 25 June 2009, the dispositive part of
which reads:
WHEREFORE,
in view of the foregoing:
1) The
Petition of Land Bank of the P41,792.94
per hectare, for a total of P19,140,965.91, by the Land Bank of the
Philippines is APPROVED, and such amount is DECLARED PAID IN FULL;
and
2) The
Petition of Kumassie Plantation Company Incorporated is DENIED. No costs.[3]
In the said Decision, we
reversed the Court of Appeals’ ruling on the amount of just compensation to be
paid KPCI, pursuant to the compulsory acquisition of its 457-hectare
landholding located in Basiawan, Santa Maria, Davao del Sur. We based our decision on the fact that the
appellate court, as well as the Regional Trial Court (RTC), failed to consider
the factors mentioned in Section 17 of Republic Act No. 6657, and to apply the
formula stated in Department of Agrarian Reform Administrative Order (DAO) No.
6, Series of 1992, as amended by DAO No. 11, Series of 1994. In accordance with our rulings in Land
Bank of the Philippines v. Banal[4]
and Land Bank of the Philippines v. Lim,[5]
we held that the factors laid down in Section 17 of Republic Act No. 6657 and
the formula stated in DAO No. 6, Series of 1992, as amended, must be adhered to
by courts in fixing the valuation of lands subject to acquisition under
agrarian reform laws. These factors and
formula are mandatory and not mere guides that the courts may disregard. Considering that the Land Bank of the
Philippines (LBP) applied the factors and formula prescribed by law for the
determination of just compensation, we rejected the RTC’s valuation of KPCI’s
land at P100,000.00 per hectare, and approved the valuation made by LBP
in the amount of P41,792.94 per hectare.
KPCI is now before us
pleading for reconsideration of our decision.
It insists that the DAR valuation formula should not bind the courts, as
the determination of just compensation is primarily a judicial function. It also claims that the LBP erred in its
computation of the just compensation to be paid, since it did not include the cacao
production of the property as part of its valuation. It further asserts that it should be
compensated for the cacao trees planted on the land because, even if the
same were planted by its lessee, the Philippine Cocoa Estates Corporation
(PCEC), the same belong to KPCI under the terms of their lease contract. It
prays for the reinstatement of the RTC and the Court of Appeals’ decision in
the present cases.
Anent the first ground
cited by KPCI, suffice it to state that while the determination of just
compensation involves the exercise of judicial discretion, such discretion must
nonetheless be discharged within the bounds of law.[6] It must be stressed that DAO No. 6, Series of
1992, as amended, partakes of the nature of a statute, as it was issued to
carry out the provisions of Republic Act No. 6657. The DAR valuation formula embodied in the
said administrative order was devised to implement Section 17 of Republic Act
No. 6657. Thus, courts are bound by the
formula unless and until the same is invalidated in appropriate proceedings.[7]
With respect to the
second ground raised by KPCI, however, there is indeed a cogent reason to
reconsider our earlier decision. We have
taken a second hard look at the computation made by LBP and found that it
mistakenly excluded figures pertaining to the land’s cacao production.
In computing for the
value of the land subject to acquisition, the formula provided in DAO No. 6,
Series of 1992, as amended, requires that figures pertaining to the Capitalized
Net Income (CNI) and Market Value (MV) of the property be used as inputs in
arriving at the correct land valuation.
Thus, the applicable formula, as correctly used by the LBP in its
valuation, is
To arrive at the figure
for the CNI of lands planted to a combination of crops, Item II B.5 of the said
administrative order provides that the same should be computed based on the
combination of actual crops produced on the covered land. The said provision states:
B.5. Total income shall be computed from the
combination of crops actually produced on the covered land whether seasonal or
permanent.
a. Landholdings
planted to permanent crop with another permanent crop/s:
a.1. In case
all the permanent crops are productive or fruit-bearing at the time of the
ocular inspection, CNI per Hectare is derived by dividing TNI/Hectare by the
capitalization rate.
Expressed
in equation form:
CNI/Ha. = TNI/Ha.
.12
Where:
TNI/Ha. = (NI 1 + NI 2 + …NIn)
Total Area
NI
1, NI 2 and NIn represent the annual net income of each crop.
Total
area is the hectarage of the land where all the crops are commonly planted.
a.2. In case
one or more of the permanent crops are productive or fruit-bearing and the
other permanent crops are not yet fruit-bearing, CNI shall be the sum of the
CNI per Hectare of the productive crop as defined in Item B.5-a.1 and the
cumulative cost per hectare of the non-fruit bearing permanent trees as defined
in Item B.4.
It is an undisputed fact
that the land subject of these consolidated cases was planted to coconuts and
cacao.[9] Thus, the LBP should have based its
computation of the CNI on the combined net incomes from the crops produced on
KPCI’s land. However, the LBP did not
include cacao in its computation because there allegedly was “no
production data available.” Moreover,
the LBP justified its non-inclusion of figures pertaining to cacao production
on the ground that the cacao trees were “introduced by the lessees,”
PCEC.[10]
Under DAO No. 6, Series
of 1992, as amended, LBP cannot simply exclude figures pertaining to the land’s
cacao production on the pretext that there was “no production data
available.” In arriving at a just
valuation of the land, the LBP could have obtained the necessary information
from various sources, adopted any available industry data or even caused an
industry study to be conducted in order to arrive at the proper figures. Items B.1 and B.2 of DAO No. 6, Series of
1992, as amended, are explicit in this point, to wit:
B.1. Industry data on production, cost of
operations and selling price shall be obtained from government/private
entities. Such entities shall include,
but not limited to the Department of Agriculture (DA), the Sugar Regulatory
Authority (SRA), the Philippine Coconut Authority (PCA) and other private
persons/entities knowledgeable in the concerned industry.
B.2. The
landowner shall submit a statement of net income derived from the land subject
of acquisition. This shall include among
others, total production and cost of operations on a per crop basis, selling
price/s (farm gate) and such other data as may be required. These data shall be validated/verified by the
Department of Agrarian Reform and Land Bank of the
In
case of failure by the landowner to submit the statement within fifteen (15)
days from the date of receipt of letter-request as certified by the Municipal
Agrarian Reform Office (MARO) or the data stated therein cannot be
verified/validated from the farmers, LBP may adopt any available industry data
or, in the absence thereof, conduct an industry study on the specific crop
which will be used in determining the production, cost and net income of the
subject landholding.
Ergo, the LBP cannot
simply brush aside the subject land’s cacao production on the flimsy
excuse that there were no available data relative to this particular
produce. As the agency primarily charged
with the determination of land valuation and compensation in acquisition
proceedings relative to agrarian reform, the LBP has at its disposal all
possible resources to come up with the necessary data in order to ensure the
proper valuation of lands acquired for the purpose. The LBP should be mindful that the compulsory
acquisition of lands under agrarian reform laws involves the forcible taking by
government of private property for distribution to farmer-beneficiaries. It should thus exert all efforts to
diligently ascertain the value of lands, if only to avoid recriminations from
landowners and farmer-beneficiaries alike.
Also, we cannot accept
LBP’s position that the subject land’s cacao production should be
excluded from the computation of the CNI, since the cacao trees were
planted by KPCI’s lessee, PCEC. DAO No.
6, Series of 1992, as amended, does not differentiate between crops planted by
the landowner and those planted by a lessee in computing for the CNI. To our mind, this is only logical since the
crops produced by the land will undoubtedly contribute to its net income
regardless of who planted the same. The
sum of incomes derived from all crops planted on the land is representative of
the land’s over-all productivity and naturally comprises part of its value.
Notably, KPCI earlier
submitted to us a copy of a Memorandum[11]
dated 25 July 2000 in which it appears that the LBP approved the upward
adjustment of the subject land’s value to include a “2% Cacao Gross Sale” in
the computation of the CNI. The “2%
Cacao Gross P18,541,635.00. The latter amount was made payable to PCEC as
planter and supposed owner of the cacao trees.
In its Memorandum filed
in G.R. No. 178097, LBP urged us to ignore the Memorandum dated
In view of our earlier
observation that LBP erroneously excluded figures pertaining to the subject land’s
cacao production in the computation of the CNI, it is difficult to
ignore the Memorandum dated P8,116,919.09 to KPCI, over and above the P19,140,965.91
that the former had already paid as original valuation of the subject land. We cannot simply turn a blind eye and not
take this document into account, especially as it reinforces our independent
observation that LBP’s computation was indeed erroneous.
At any rate, while we
view the said memorandum as an indication that LBP committed a mistake in its
computation, we are not prepared to accept the actual amount specified in said
document as the true and final sum owed to KPCI as just compensation for its
property. Although it would seem that
the additional value of the land appearing in said document took into
consideration the “2% Cacao Gross P8,116,919.09. In other words, while the document fortifies
our finding that LBP erroneously omitted figures relative to the cacao production
of the subject land, we cannot conclusively determine the accuracy and
correctness of the computation and figures from an examination of said
document.
In light of the
foregoing, we are compelled to remand the instant consolidated cases to the RTC
for the proper computation of just compensation, based on the formula and
parameters provided in DAO No. 6, Series of 1992, as amended. While this Court wants to write finis to
these consolidated cases by computing the just compensation due to KPCI, the
evidence on record is not sufficient for the Court to do so in accordance with
DAO No. 6, Series of 1992, as amended.[13] We are thus left with no choice but to return
these cases to the RTC for a determination of the correct valuation of the
subject land.
Lastly, the matter of who
is entitled to the value of the cacao trees should be resolved in
separate proceedings between KPCI and its lessee, PCEC. Underlying this matter is the determination
of who properly owns the cacao trees under the lease contract between
the parties. The RTC had no authority to
resolve this issue, which involves the interpretation of contractual
stipulations, as it merely acted as a
WHEREFORE, after due deliberation, the Motion for Reconsideration,
dated
SO ORDERED.
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MINITA V. CHICO-NAZARIOAssociate
Justice Chairperson |
WE
CONCUR:
Associate Justice
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ANTONIO EDUARDO B. NACHURA Associate Justice |
DIOSDADO M. PERALTAAssociate Justice |
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LUCAS P. BERSAMIN Associate Justice |
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ATTESTATION
I attest that the conclusions in
the above Resolution were reached in consultation before the case was assigned
to the writer of the opinion of the Court’s Division.
MINITA V.
CHICO-NAZARIO
Associate
Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Resolution were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S. PUNO
Chief Justice
* Associate
Justice Lucas P. Bersamin was designated to sit as additional member replacing
Associate Justice Renato C. Corona per Raffle dated
[1] Dated
[2] Dated
[3] Rollo (G.R. No. 177404) p. 413.
[4] 478
Phil. 701 (2004).
[5] G.R.
No. 171941,
[6] Land Bank of the
[7] Land Bank of the
[8] CA
rollo, pp. 45-46.
[9] Rollo (G.R. No. 177404), p. 394.
[10]
[11] Rollo (G.R. No. 178097), pp. 277-279.
[12] The
RTC rendered its Decision on
[13] Land Bank of the